Concepts
Business Cycle
Also Known As Trade Cycle
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The recurring, irregular pattern of expansion and contraction in aggregate economic activity, marked by phases of expansion, peak, contraction and trough. Schools of economic thought disagree sharply about its cause: Austrian economists trace it to central-bank credit expansion distorting interest rates and triggering malinvestment; Keynesians point to swings in aggregate demand and investor confidence; and Monetarists attribute it chiefly to fluctuations in the money supply.
Facts
Proposed ByWesley C. Mitchell and Arthur F. Burns 2 Names the field's now-standard DEFINITION, not the phenomenon's discovery: business-cycle observation has no single originator and business crises were already being studied statistically in the 19th century (Clement Juglar's roughly decade-long cycle, 1862). Mitchell and Burns's 1946 Measuring Business Cycles, produced through the National Bureau of Economic Research Mitchell had co-founded in 1920, set the definition still used to date cycles today. SignificanceThe changes in economic activity that characterize business cycles have important implications for the welfare of the general population, government institutions and private-sector firms, which is why every major school of economic thought offers its own causal account of them. 2 Cross-Tradition Connections
Associated With
Held Differently
Why this is disputed. Austrian Business Cycle Theory attributes the cycle to central-bank credit expansion distorting the interest rate and misdirecting investment.
Why this is disputed. Keynesians attribute the cycle chiefly to swings in aggregate demand and investor confidence (animal spirits).
Why this is disputed. Monetarists attribute the cycle chiefly to fluctuations in the growth rate of the money supply.
Associated With School
Minsky's financial instability hypothesis reads the cycle as endogenously generated by rising leverage during calm expansions, a distinct causal account from the Austrian, Keynesian and Monetarist readings already on record here.
Sources
1. The New Palgrave Dictionary of Economics
Palgrave Macmillanbusiness cycle
1. The New Palgrave Dictionary of Economics
Palgrave MacmillanAssociated With School: Austrian School
1. The New Palgrave Dictionary of Economics
Palgrave MacmillanAssociated With School: Keynesian Economics
1. The New Palgrave Dictionary of Economics
Palgrave MacmillanAssociated With School: Monetarist Economics
1. The New Palgrave Dictionary of Economics
Palgrave MacmillanAssociated With: Great Depression
2. Wikipedia
Wikimedia FoundationDefinition and measurement sectionQuote, Definition and measurement section
In 1946, economists Arthur F. Burns and Wesley C. Mitchell provided the now standard definition of business cycles in their book Measuring Business Cycles.
2. Wikipedia
Wikimedia FoundationLead sectionQuote, Lead section
The changes in economic activity that characterize business cycles have important implications for the welfare of the general population, government institutions, and private sector firms.
Encyclopaedia Britannica
Encyclopaedia Britannica, Inc.
Stabilizing an Unstable Economy
Hyman Minsky, Yale University Press, 1986Associated With School: Post-Keynesian Economics
Stabilizing an Unstable Economy
Hyman Minsky, Yale University Press, 1986Associated With: Hyman Minsky, Chapter 8Quote, Associated With: Hyman Minsky, Chapter 8
Minsky's financial instability hypothesis in Stabilizing an Unstable Economy argues that stability in the business cycle itself breeds the risk-taking that produces the next crisis.
Stabilizing an Unstable Economy
Hyman Minsky, Yale University Press, 1986Associated With School: Post-Keynesian Economics, Chapter 8Quote, Associated With School: Post-Keynesian Economics, Chapter 8
Minsky's financial instability hypothesis is a landmark of post-Keynesian business cycle theory.
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